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Press Mentions

Ad Age: Why So Many Media Companies Stumble GloballyThe few news brands that have succeeded, to greater or lesser degrees, arguably include CNN, Bloomberg, People, Thomson Reuters, The Wall Street Journal, The New York Times, The Financial Times and The Economist. Other contenders are the Associated Press, the BBC, ABC, NBC, maybe CBS, National Public Radio, News Corp. and the top U.K. dailies, said Ken Doctor, the newspaper veteran who's now an analyst at Outsell. "If a news-media organization sees itself as covering the wider world, sees it as its foundation, that in and of itself differentiates it from all the local media -- newspapers, TV, radio -- out there," he said. "If, in addition, it has substantial reporting and editing resources, then it can play. The tough part is the part we're in: Who wins the race to ubiquity and can make it pay off?"

NYT: If The Globe Were Sold, What Price? “The best guesstimate of the real price: a buck. The best of an announced price: between $50 and $100 million,” he wrote in an e-mail message. The devil will be in the details of the obligations that a buyer would assume, he said, adding that “a buck essentially represents a gentleman’s agreement: I take a liability, headache and a distraction off your hands.”
He said that the Times Company could hang on to some pension liabilities or other obligations in exchange for a higher purchase price, a number that would give the appearance that it was getting something for the more than $1 billion it paid 16 years ago. He added that no bank would be interested in financing a deal given how other deals have blown up, so “the owner’s own money is immediately at risk.”

BizTimes.com: Journal Sentinel faces daunting choices“There’s no strategy – this is panic. What we’re likely to see this year (around the country) and what we’ll see in Milwaukee too is (publishers asking) how much they need to cut back and how much they can do to still hold their place in the market. For publishers, it’s about ‘How do we stay alive and stay profitable until we can get to some sort of breathing period?’ (Economic) recovery will not bring back their old business, but it will give them some breathing room.”

AP: Threat to shut Boston Globe shows no paper is safThe threat to close the paper "sends a very clear message to all employees and unions of surviving newspapers — that this is not business as usual. This is uncharted territory....Newspapers all "have a sword over their heads," said Doctor. If the industry wants to survive, he said, "everyone has to give some blood."

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October 26, 2009

Circ Math 101: Less is Less

We knew that USA Today's early word of a circulation plunge -- 17%, announced by Gannett two weeks ago -- would probably be a sick canary in a dark coal mine.

Today's semi-annual circulation FAS-FAX numbers for U.S. dailies, though, are still breathtaking. On average, 10.6% down daily and 7.4% Sunday. That's on average, and largely twice as bad as the declines have been over the past four-plus years. Look at some of the individual results, and you understand why the New York Times just announced that it is taking another 100 jobs out of its newsroom and why other newsroom (and, of course, wider) cuts may increase -- not decrease -- as Wall Street indicates that an overall economic recovery will be a 2010 reality.

More of the same, though now with evidence of a tipping point. Inevitably, for the print product, less is less.

Newspaper readers have hung with their local papers through thick and through increasing thin. The value proposition they now see, though, is a lesser one: Smaller product, less news, fewer ads of all kinds, more e-reading choices -- and higher prices.

Yes, most newspaper companies have embarked on a premium print pricing strategy, in some cases doubling single-copy prices and upping home delivery significantly. And, yes, these increases have provided a circ revenue bump just as ad revenue tanked (both McClatchy (6.7%) and Media General (11%) recently reported quarterly circ revenue gains). Yet, they've made the value proposition for print harder to justify. Now, add the recession-induced pocketbook concern to all the greater changes in the news world, and publishers may have shone a spotlight on the print newspaper product.

They have moved it from being a necessity, a habit, to a discretionary buy. (More on the history of the ebbing habit, from Alan Mutter.)

It's been a tough formula, but one that did make a kind of sense. Acknowledge that newspapers are a niche buy (while Google, Yahoo, AOL and MSN have become the mass daily stop), and price accordingly. Take a hit in volume, but make it up in pricing. It looked like that strategy was working for the past couple of years, as circ revenue's been flat to slightly up at most companies.

The risk: Too many readers would opt out. One ABC survey isn't enough to tell us whether we've reached that point definitively, but it's a huge warning sign.

Put yourself in publishers' shoes, planning for 2010. Today's numbers tell them a couple of things, at least:

If fewer readers won't pay for print, can they get them to pay for new e-reading choices? They'll watch the Wall Street Journal's test of mobile pricing. They'll work with Journalism Online to see which digital value propositions have a prayer of working. They'll think hard about the Kindles, Nooks (good comparison with the Kindle by Gizmodo's Matt Buchanan on NPR), Ques and Readers, and how they can get news readers to pay for delivery through that new platform.

It's going to be harder to get a thick slice of the ad spending
returning to the marketplace, as the economy normalizes. Publishers' mass
market proposition, already weakened, is now further in question (more on cycle of decline, from Rick Edmonds). Their
pricing, always a sore point among advertisers, is now even harder to
justify among the proliferation of pay-for-performance ad choices. (Good piece by NYT's Stephanie Clifford on that.) As they look anew at their ad sales propositions, they'll need to double down on the notion of premium content, premium audience and superior targeting -- and give often skeptical ad buyers reasons to believe.